Agriculture should not be allowed to lie fallow

By Huang Biing-wen 黃炳文 /

Thu, Dec 20, 2012 - Page 8

Why are Taiwanese farmers apparently so willing to let large areas of their farmland lie idle? The answer is that they have little choice in the matter.

From the 1980s, the nation has been going through a steady process of trade liberalization. This has meant that the number of high-quality, inexpensive agricultural imports has been increasing. When Taiwan joined the WTO in 2002, it had an agricultural trade deficit of NT$4 billion (US$137.8 million) and this climbed to just above NT$10 billion eight years later. Given the grave challenges the agricultural industry now faces, one cannot blame farmers for being uncertain about which crops would be best to plant. They were forced into this situation by trade liberalization.

To deal with the impact of trade liberalization, the authorities started in 1984 to encourage farmers to move away from rice and wheat crops to cereals or grains or, alternatively, to let the land lie idle. Many farmers did attempt to transition to cereals and grains, but still found it difficult to compete with agricultural imports and eventually had to comply with the policy of leaving land uncultivated. This meant that the amount of idle farmland increased from 5,700 hectares in 1984, to 200,000 hectares last year. Farmers were again left with little alternative, this time due to government policy.

Taiwan has limited resources, so it may be difficult for people to understand why farmers are leaving farmland fallow, especially when the government is spending almost NT$10 billion every year on agricultural subsidies. This has made many suspicious: having uncultivated, fallow land has come to be seen as a kind of sin. A sin it may be, but the farmers have their hands tied.

Land is left idle due to a combination of factors, including ownership structure, farmland rotation and the way farms operate. The government has developed a set of measures to bring fallow land back into use, support local cereal and grain production so it can compete with imports, develop strategic local specialty produce, promote competitive agricultural exports and encourage older farmers to rent out their farmland.

In general, these measures are moving in the right direction, but the roots of the fallow land problem reside in the structure of the agricultural sector and in the increasingly internationalized nature of trade. Unless these two factors are better understood and dealt with, these measures are likely to address only the symptoms of the issue and not get to its roots. This is especially true if Taiwan signs a free-trade agreement with the US or joins the Trans-Pacific Partnership, which would make the international factor even more relevant. How can the nation deal with the root causes of the issue? It will take a concerted effort.

First, an agricultural supply chain must be established, along with a revised farmers’ pension scheme and a farmland mobility system. Furthermore, the functions of the Council of Agriculture-backed Farmland Bank should be increased to encourage elderly farmers and those with idle land to hand their land over to the bank. The bank could then lease the land to younger, more able-bodied farmers or consortia representing farmers or landowners that could enter into contracts with distributors to supply agricultural products for domestic and export markets.

These improvements would make the industry more efficient and enhance the competitiveness of local agricultural products in the international market. This would bring financial reward to farmers and farmland would be put to good use. It would turn around a situation in which farmers have no alternative but to leave some or all of their land idle, and give the whole industry cause to smile.

Huang Biing-wen is a professor in the Department of Applied Economics at National Chung Hsing University.